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Showing posts with label Pandemic. Show all posts
Showing posts with label Pandemic. Show all posts

Warren Buffett and Airlines : 3 Different Perspectives

Warren Buffett and Airlines Industry


                                                      Warren Buffett is the most followed Investor billionaire in the world. People follow his advice and watch his moves very keenly. His quotes are legendary.
                                                         In early May 2020, he suddenly exited the airline's Industry selling his entire stake. He said: American magic has always prevailed and it will do so again 
                                                        The world has changed for airlines and we wish them well.
                                                    
                                                        In this article, we have discussed his views on the Airlines Industry. References are taken from his letter to shareholders that are published every year on the Berkshire Hathaway website.
                                                    .His views have changed about the industry. Recently he changed his views turning 180 degrees. His views can be divided into 3 different phases.                                    
Phase 1 (1987-2007) :
                                                      The worst sort of business is the one that grows rapidly, requires significant capital to engender growth, and then earns little or no money. Think airlines. Here durable competitive advantage has proven elusive ever since the days of Wright brothers. Indeed if a farsighted capitalist had been present at Kitty Hawk, He would have done his successors a huge favor by shooting  Orville down.  Warren Buffett wrote in his letter to shareholders in 2007.
                                                      The demand for capital by the airlines' industry has been insatiable. Investors have poured money into a bottomless pit, attracted by the growth when they should have been repelled by it. And I, to my shame, participated in this foolishness when I had Berkshire buy US Air preferred stock in 1989. As the ink was drying on our check, the company went into a tailspin, and before long our preferred dividend was no longer paid. But we got lucky. In one of the recurrent, but always misguided, bursts of optimism for airlines we were actually able to sell our shares in 1998 for a hefty gain. In the decade that following our sale, the company went bankrupt. Twice.

                                                     Buffett's remarks that investors would have saved billions of dollars if someone had shot down the Wright Brothers plane is perhaps the best-known criticism of Airlines Industries. Indeed just in the 2001-2005 period, US airlines collectively lost $40 billion.
                                                      For decades the airline industry has hovered between profit and loss. In most cases, the losses have outweighed the profits over time.
                                                     In 1994 Warren Buffett in his letter to shareholders wrote- As the capacity of the low-cost operators expanded, their fares began to force old-line high-cost airlines operators to cut their own, Eventually the fundamental rule of economics prevailed: In an unregulated commodity business, a company must lower its cost to competitive levels or face extinction.



Airplanes on a Busy Airport
Airplanes waiting on a busy Airport Terminal
                                                  

                                               The US airline industry was disrupted in early 1990 when low-cost airlines undercut the legacy carrier's fares. The rapid growth of low-cost airlines led to big losses across the industry. Legacy carriers were forced to match their competitors otherwise their base customers would drift away.
Phase 2 (2015-16)
                                                In 2015-16 Warren Buffett decided to buy Airlines Stocks. He changed his long standing stance. He had already purchased Railroad companies in the 2000-2003 period and was interested in transportation. He purchased shares in Delta, American, Southwest, and United Airlines. Probable reasons were as follows.
  • Rising Demand for Seats.
  • Consolidation in the Airlines Industry
  • Reliable Buybacks in Stocks
  • Relative Stable Prices
  • Efficient Managers.
                                        Warren Buffett knew they have terrible economies but stable outlook may have caused him to change his mind. He had thought that Berkshire will get a higher rate of return because of the low multiples of the stocks. He purchased about 9%-11% in each of these stocks. In between, there was a rumor that Berkshire may purchase majority shares in Southwest Airlines. Possibility of share buybacks by companies also made him change is views.
Phase 3 (COVID 19 Pandemic 2020):
                                         The COVID 19 Pandemic hit the airline industry badly. The shares of Airlines started falling. The passenger numbers started falling. The buyback of the shares was put on the backburner.

                                      The current crisis is creating a huge amount of anxiety and changing consumers psyche. Some industries may be permanently altered by the coronavirus such as airlines. Berkshire was a top three shareholder in American Airlines Group Inc, Delta Airlines Inc, Southwest Airlines Co, and United Airlines Holdings Inc, as recently as April 2020. Buffett has decided to completely exit from his positions. The world has changed for airliners and we wish them well.
                                       Even though Buffett is the long term believer of the US economy as a whole his 180-degree turn on the airline industry shows that he sees virus changing some consumer behavior. I believe in the American story and I hope my successors will continue to believe in the same.He informed his shareholders about the same. He took money out of the Airlines Industry. This was done at a substantial loss.

                                      He said: American magic has always prevailed and it will do so again 
the world has changed for airlines and we wish them well.


Author : Dr Nishikant Sharma MD FACP
Health care Professional
Content Writer 


Dr Nishikant Sharma MD FACP

References from Berkshirehatahway.com and Businessinsider.com
https://www.berkshirehathaway.com/letters/2015ltr.pdf.
https://markets.businessinsider.com/news/stocks/why-warren-buffett-invested-big-4-airlines-sold-them-loss-2020-5-1029167021
To Know more about Mindful Investing:
https://www.mindfulnessdrnishikantmd.com/2019/08/mindful-investing.html

Has China Won World War 3 Without Firing a Single Bullet?


Has China Won World War 3 Without Firing a Single Bullet?

            China is one of the major powers in the world. It has one of the biggest economies in the world. The United States is the largest economies in the world at present. China has in the last decade overtaken Japan to become the second-largest economy in the world. Other countries that have large economies are Japan, Germany, France, India, United Kingdom, Canada, and Italy.

Chinese Century
                       19th Century has belonged to the British."Pax Britannica"(British Peace) is the term popularly used for the British Empire between 1825 to 1915. The British Empire was so big that the Sun Never set in the Empire. It had colonies from West Indies to India and Hongkong in the East. British navy controlled most of the sea trade routes.


                       20th Century is popularly known as The American Century. After World war 2 United States rose into prominence and emerged as a major economic power. After a great recession in 1930, it did splendid economic recovery and emerged as a strong economy. The United States took the leadership role in the world. It has many world-class companies that have sales in different parts of the world. The computer revolution has heralded information age. Silicon Valley is the birthplace of many multinational companies like Apple, Microsoft, Amazon, etc.

                    Chinese Century is a term suggesting that the 21st Century will belong to China. The 21st Century will be geopolitically dominated by China.

                     China has the size and population to fulfill its ambition. China has the largest population in the world. China had state policies that are different from the rest of the world. China is governed by a single party. It has a communist-style of governance, unlike western democracies. The government is secretive. The labor laws are different from the rest of the world. China produces cheap machines, steel, garments, textile, electronic instruments, computers, etc. These things are produced on a mass scale. Cheap labor keeps the cost low. China can sell these items to different countries in the world because of lower rates.

                           American President has many times labeled China as a currency manipulator. The economy of China is going to overtake the Economy of the United States in the next two decades. The Chinese economy is set to become the largest economy in the world.

Islands in the South China Sea.
                       China has geopolitical ambitions. It has one of the largest armies in the world. It is a nuclear power as well. It claims many islands in the South China Sea as its own. Though neighboring countries like Taiwan, Vietnam, and the Philippines do not accept the claims. However China because of its size seems to ignore these countries.

                    China has created the Shanghai Cooperation Organization as an alternative to Nato. China has revived the Silk Road of the past. It has created a belt and road initiative. It has connected China to Germany by train so that Chinese goods can travel to Europe easily. The Belt and Road initiative passes through many countries. This improves trade between the countries.

 COVID 19

                         The COVID 19 pandemic started from Wuhan City in Hubei Province of China. It perhaps started from the seafood market in Wuhan. Incidentally, Wuhan has a Virology research center where a lot of research is done about coronavirus and other viruses. Viruses can be used as biological warfare agents. Many people suspect that the virus accidentally leaked from the lab. There is no proof of that. However many conspiracy theories are floating around.

                            After an initial lag of response China did the lockdown of Wuhan City. The movement of people out of the city was stopped. Its lockdown was strictly implemented.

                            China was ready with a big hospital in 10 days in Wuhan. It was very effective in controlling the disease. The disease could not spread to other parts of China like Shanghai and Beijing. The discipline paid off handsomely.

                            However, the disease did spread to other countries. Whether unknowingly or knowingly this sophisticated Chinese government allowed its overseas spread. The local spread was contained but the international spread was not. Many Chinese were returning to Europe and the US from Wuhan and other Chinese cities by air travel. This caused the spread of the disease to other countries where it has spread like wildfire.

Sluggish Response Of Other Countries. 

                               The initial response of many Western Countries was very sluggish. Many leaders thought It is just another flu. Western Countries like Italy, France, UK, USA have very good health infrastructure. However, the pandemic was far too severe. It has overwhelmed the health systems of the countries. International air travel could have been banned early. This decisive step could have stopped the pandemic in the early stages.

                                 Many people in The West especially the United States are not used to wearing a mask. They perceive it as a threat to their freedom. SAR's Epidemic in Asia in 2002-20004 made the population aware of the threat of respiratory infections. Many people in HongKong, China, Singapore, Japan routinely wear masks. This has contributed to controlling the infection this time quickly.

 Advantage China

                                 Meantime China has controlled the infection efficiently. The Western democracies are suffering from the Pandemic. The worst-hit are the United States, the UK, Italy, Spain, France, and Iran. The number of cases in India and Brazil is also increasing. Many countries want to reopen the economy. This reopening can cause a further flare-up of the infection.

                                Unlike China, the lockdown was not strictly implemented. This has lead to a huge loss of human lives. Presently United states have the highest mortality followed by the UK and Italy. The pandemic is far from over. Even Dr. Anthony Fauci the Physician who is at the forefront of the American response has said that we cannot decide on the timeline, The virus will decide the timeline.

                               Joblessness has increased. Many industries are on the verge of collapse. Small businesses have been hit badly. This has caused huge economic loss to the countries. The economies of Europe and North America can enter into a recession. The price of oil has collapsed because of weak demand. This will again benefit the major consumers of oil like China.

                               China has recovered from the pandemic efficiently. It has reopened businesses. International travel has started. It has resumed its exports. Its markets are opened. The indigenous industries of the rest of the world are decimated. They are looking to China to supply them with masks, PPE's For healthcare workers and pharmaceutical ingredients. China's economy will start booming again in no time.

                             The Chinese economy is on the path of recovery. On the other hand, the economies of most of the countries are on shaky grounds. China has managed the epidemic efficiently. Meantime the overconfident western democracies are struggling to contain the pandemic and its economic consequences.
China has won the war without firing a single bullet!.




Dr. Nishikant Sharma MD FACP
Dr. Nishikant Sharma MD FACP is a Health care Professional.
He is an advocate of quality healthcare at affordable prices for all. 
He is a Medical Writer and Content Creator.
Done course in Content Writing from the University Of California Davis. (Coursera)
References From: with thanks 
https://en.wikipedia.org/wiki/Pax_Britannica
https://en.wikipedia.org/wiki/Chinese_Century
https://theprint.in/world/anthony-fauci-doctor-leading-us-coronavirus-battle-nominated-for-civil-service-oscar/413801/
To know more about How to Reduce Anxiety and stay motivated during the Pandemic. Please click on https://www.mindfulnessdrnishikantmd.com/2020/05/3-easy-ways-to-reduce-anxiety-and-stay.html

Covid 19 Pandemic & Diabetes : 3 Recommendations to keep You Healthy and Safe

COVID 19 Pandemic & Diabetes : 3 Recommendations to keep you Healthy and Safe


                              We are facing the worst worldwide epidemic in recent memory. What is puzzling is that many infected people have no symptoms while a few others are seriously ill. This includes people suffering from Diabetes. The people having Diabetes are having a more severe form of infection. 

                               Here are the 2 scholarly articles that I have found out for you regarding COVID 19 infection and Diabetes. It is followed by 3 Recommendations for your safe journey through these turbulent times.

                         
                              The first article is from Dr. Sten Madsbad, Dept of Endocrinology, Hvidovre Hospital, University of Copenhagen, Denmark. https://bit.ly/3eDWQ0z

                               The Ongoing COVID 19 infection is a double challenge for people with diabetes. Diabetes is a risk factor for the severity of the disease. Diabetes increases the chance of getting any infection. People who have uncontrolled blood sugar levels are at high risk of developing infection and its more severe form. During the lockdown conditions, people have to control blood sugar in a situation with decreased or more variable availability of food.

                              COVID 19 (Coronavirus Disease ) is caused by coronavirus SARS- CoV-2 organism. It has quickly spread to more than 160 countries across the globe. The mode of transmission is primarily by respiratory droplets between people. It is characterized by a wide variety of symptoms including fever, cough and breathing difficulties.


                                     
















         The 2nd article is from Medical News Today published recently. https://bit.ly/3eCwE6d

                                         More than 425 million people worldwide have diabetes. There are two types of diabetes: Type 1 and Type 2. Gestational diabetes is another type that affects some women during pregnancy.
                                        Type 1 Diabetes is an autoimmune type and usually present from childhood. It results in no or very little insulin production. These patients need Insulin to be given externally.
                                          The majority of people have type 2 diabetes and are on oral medicines. Many have Obesity and hypertension as well. Some of them may need Insulin as well.
                                          According to the Center for disease control and prevention (CDC) people with diabetes who develop COVID 19 are at a higher risk of developing a serious illness like Pneumonia.

                               
                                 However, with good blood sugar control, people with diabetes can reduce the risk of getting severely sick from COVID-1                                                                                         Here are our 3 recommendations for COVID 19 and Diabetes.

  1. Control your Blood sugar properly. Check Your Blood Sugar and HbA1c levels. Maintain HbA1c levels around 6.5 to 7. Continue treatment as per your doctor's advice.
  2. Avoid Excessive Amounts of Carbohydrates and Sugar. You can increase protein intake. Similarly, Excessive salts and fried food items should be avoided. The intake of green leafy vegetables and salads should be increased.
  3. Continue Physical Exercises. During quarantine periods many people are unable to go outside for walks and outdoor exercises. Try to do some workouts at home to remain fit. You can do aerobics and yoga at home. Mindfulness can also help to reduce anxiety and stress during these turbulent times.





     Author: Dr. Nishikant Sharma  MD     FACP. Consultant Internal Medicine Specialist with Special Interest in the field of Diabetes.

       He is also a student at Northwestern University Coursera.

  He is an advocate of Quality Healthcare for all at affordable prices.

      He wants to empower people with scientific knowledge so that they can face diseases successfully with confidence and a positive attitude.

Click here to know more about How to boost your immunity during COVID 19 Pandemic: https://bit.ly/2yj0hsR





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